House votes to extend jobless benefits an additional 13 weeks

The House voted overwhelmingly Tuesday night to approve a $1.4 billion stop-gap extension of jobless benefits, but some states are beginning to seek longer-term solutions to an unemployment problem that is expected to remain serious for the rest of the year and may grow worse next year.

The extension, covering an additional 13 weeks, will maintain payments for more than 1 million workers in 29 hard-hit states whose benefits are set to expire before the end of the year. Unemployment payments for more than 300,000 people will end this month alone.

The extension would apply to about 75 percent of all unemployed workers in the United States, including those in California, New York, Florida, Illinois, Pennsylvania, Michigan and Ohio.

The measure, which the Senate is expected to approve shortly, would take effect as soon as it is signed into law. It would be paid for by deferring a scheduled reduction in unemployment insurance tax paid by employers.

But with the nation’s jobless rate, currently at 9.7 percent, projected to climb to double digits well into next year, researchers say that as many as 2.5 million jobless workers will exhaust benefits by next summer ? sharply increasing the cost of further extensions.

Responding to the longer-term challenge, New Jersey last week announced it would pay businesses up to $2,400 for every idle worker they hire whose government unemployment benefits have expired.

Officials in other states, along with experts in unemployment insurance policy, are looking at such options as using tax credits for job creation, as well as allocating existing federal funds to create temporary jobs, although people monitoring those talks say they are preliminary and mostly among researchers and policy analysts.

“I think we need to be creative, so everything should be on the table,” said Andrew Stettner, deputy director of the National Employment Law Project, a research and advocacy group.

The United States, unlike many European and other developed countries, has traditionally seen unemployment insurance as a short-term device to cushion workers against the normal ups and downs of the economy. But the latest recession, the worst in more than half a century, has forced a reconsideration of that approach.

The official number of unemployed in the U.S. has doubled to 15 million, and a record one-third of those workers have been jobless for six months or longer.

Previous legislation and President Barack Obama’s stimulus package extended the normal 26-week jobless benefits to as much as 79 weeks. The new measure would take that up to 92 weeks in states with an average unemployment rate of at least 8.5 percent over the last three months.

Benefits range from $40 to $450 a week, although the stimulus package added $25 a week for the remainder of 2009.

Soon “you’re going to be rolling into Christmas season … it will have a huge impact,” said Rep. Jim McDermott, D-Wash., who introduced the legislation approved Tuesday in an expedited vote by 331 to 83.

But it’s unclear how much longer Washington can keep the safety net in place for the long-term jobless, especially given the concerns about the nation’s soaring budget deficit.

Gary Burtless, a senior fellow at the Brookings Institution think tank, says the extension of benefits is urgently needed and will also pump up consumer spending, a critical component of the economy.

“But what about people who exhaust benefits after January 1?” he asked. “There is an element of fairness and even-handedness.”

Among other ideas, Burtless has suggested that the government consider creating public-service jobs to help long-term jobless workers, but he said there appeared to be little support for such a plan.

Timothy Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research, has argued for a tax credit to businesses that create job. The plan is similar to a government subsidy that was used in the 1970s but has garnered little support from Congress.

Severe budget crunches in some of the largest states with very high unemployment would make innovations difficult. With strained budgets and over-worked staffs, maintaining the status quo is a challenge initself.

Without federal help, many states wouldn’t be able to pay jobless benefits. Unemployment insurance funds are insolvent in 21 states.

“States throughout the country are finding they did not collect enough money to cover a recession this long and this deep,” said Philip J. Romero, dean of the College of Business and Economics at Cal State Los Angeles.

While the extended benefits will certainly be welcomed by states, it will add a crush of more applications for thinly staffed departments that already are stretched to the limit.

The California Employment Development Department has added Saturday hours as well as computers in the lobbies to speed up and handle the bulging volume of applicants. “The demand is just unprecedented,” said Loree Levy, an EDD spokeswoman.